ASIF Report highlights improved reporting of suspicious activity

By Vatican News

According to its Annual Report published on Wednesday, the Supervisory and Financial Information Authority (ASIF) continued its work in 2024 consolidating the Holy See’s and the Vatican City State’s efforts to prevent and counter money laundering and the financing of terrorism and of the proliferation of weapons of mass destruction (ML/TF).

Reporting suspicious activity

In 2024, ASIF received 79 reports of suspicious activity (compared to the 123 of 2023), of which 73 came from the supervised entity (compared to 118 in 2023). This decrease is considered positive as it represents an increase in quality rather than a reduced vigilance by the reporting parties.

As ASIF explains in the Report, the trend appears to be mainly attributable to the progressive refinement of the selection process for cases to be reported, as shown by indicators such as increased internal and international collaboration (65 communications compared to 54 in 2023, and 44 exchanges compared to 32 in 2023), the steady number of reports forwarded to the Office of the Promoter of Justice (11, the same as 2023), and the increase in the number of preventive measures adopted (three measures to suspend transfer transactions and two to freeze accounts, compared to one suspension measure in 2023).

Further confirmation of the strengthening of the ML/TF system, whose core lies in the reporting of suspicious activity, also comes from the results of a targeted inspection at the supervised entity. ASIF reports “an adequate commitment,” “an overall effective organizational and procedural system,” and the swift development of a plan to address “limited areas for improvement.”

Ongoing monitoring and the resumption of training activities for the supervised entity (starting with a training session held on December 19–20, 2024) are also relevant elements supporting ASIF’s ongoing commitment.

Greater attention to “geographical risk”

The 2024 Annual Report introduces a distinction between reports of suspicious activity that feature clear indicators of anomalies (this year, for the first time, the most frequent indicators of anomalies were published) and those reports prompted solely by direct or indirect connections with high-risk jurisdictions or those under enhanced monitoring (36 of the 79 total).

The change represents a significant innovation, which shows special attention to so-called “geographical risk”—a crucial element for the effectiveness of the ML/TF system in a jurisdiction whose only entity performing professional financial activities serves the Church worldwide, especially in regions where the Church’s presence is most needed.

However, ASIF confirms no critical issues: none of these reports resulted in a report being sent to the Office of the Promoter of Justice.

IOR remains a solid and well-organized entity

Throughout 2024, ASIF conducted constant and systematic reviews of aspects relevant to the sound, prudent, and sustainable management of the Institute for the Works of Religion (IOR).

Close supervision of compliance with prudential rules and operational limits, along with monitoring of the financial and liquidity situation of the only institution authorized to conduct professional financial activity in the jurisdiction, was enhanced by refining the so-called "Supervisory Review and Evaluation Process" (SREP) and by introducing a requirement for the Institute to publish information on environmental, social, and corporate governance risks (thus embracing the growing importance of ESG factors).

Special attention was also paid to the area of finance. The results of all these activities allowed Dr. Carmelo Barbagallo, in his “President’s Letter” introducing the Annual Report, to highlight the “good results achieved by the IOR, which is confirmed as a solid and well-organized entity.”

Moneyval confirms the improvements

The 2024 Annual Report also highlights the positive outcome of the follow-up by the Council of Europe’s Moneyval Committee on technical compliance, i.e. how well the jurisdiction’s regulatory framework aligns with the standards of the Financial Action Task Force (FATF).

During the 5th round of mutual evaluations, the Holy See (including the Vatican City State) was assessed for progress made following the April 2021 Mutual Evaluation Report.

During the 67th Plenary Meeting of the Moneyval Committee in May 2024, all three recommendations that had required reassessment were upgraded (Recommendation 13 on correspondent banking; Recommendation 16 on wire transfers; and Recommendation 24 on transparency and beneficial ownership of legal persons).

At present, the jurisdiction has achieved full or high compliance with 35 out of 39 applicable recommendations.

The “President’s Letter”

“The  Annual Report,” writes Dr. Barbagallo in the introduction, reassures, with the strength of the numbers and the concreteness of its action, that the Supervisory and Financial Information Authority has maintained, during 2024, a high standard in its action of preventing and countering money laundering and the financing of terrorism and in its supervisory activity on the IOR.

This is evidenced by the quality of cooperation with domestic and international Authorities as well as the good results achieved by the IOR.

“Among the activities carried out by the Authority,” Dr. Barbagallo adds, “I would like, here, to emphasize the relevance of two of them: on the one hand, the ability to identify - for the purpose of subsequent recovery - the path of money illicitly obtained; on the other hand, the contribution given to the Vatican Authorities and legal persons in the prevention of money laundering and the use of money derived from crimes.”